Lehman sues JPMorgan, seeks $5 Billion in damages

By SiliconIndia   |   Thursday, 27 May 2010, 10:37 Hrs   |    1 Comments
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Bangalore: Lehman Brothers sued JPMorgan Chase and Co, and filed a lawsuit in Manhattan bankruptcy court accused JPMorgan of using its unparalleled access to inside details of Lehman's distress to extract $8.6 billion of collateral in the four business days ahead of Lehman's Sept. 15, 2008, bankruptcy, including $5 billion on the final business day.

This accuse is the second-largest U.S. bank of illegally siphoning billions of dollars of desperately-needed assets in the days leading up to its record bankruptcy.

"With this financial gun to Lehman's head, JPMorgan was able to extract extraordinarily one-sided agreements from Lehman literally overnight, Those billions of dollars in collateral rightfully belong to the Lehman estate and its creditors, the complaint said.

Lehman also said JPMorgan officials including Chief Executive Jamie Dimon decided to extract the collateral after learning from meetings with Federal Reserve Chairman Ben Bernanke and then-U.S. Treasury Secretary Henry Paulson that the government would not rescue Lehman from bankruptcy.

In the widely expected lawsuit, Lehman and its official committee of unsecured creditors are seeking $5 billion of damages, a return of the collateral and other remedies.

JPMorgan spokesman Joe Evangelisti said that the lawsuit is meritless and the bank will defend against it.

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